The Lloyds building in London. The Lloyd’s of London insurance market has posted a 28% drop in first-half pretax profit.
Photograph: Dan Kitwood/Getty Images

The Lloyd’s of London insurance market has posted a 28% drop in first-half pretax profit, saying that pricing remained tough in a competitive market.

The insurance and reinsurance markets have attracted new players in recent years, drawn by high returns compared with other markets.

“We are in an intensively competitive environment at the moment because of the attractive returns,” the chief executive, Inga Beale, said, adding that this meant “there has been some pressure on pricing”.

Pretax profit for the half-year to 30 June fell 28% to £1.19bn, the firm said on Thursday.

Lloyd’s’ combined ratio, a measure of profitability showing how much of insurance premiums are paid out in claims and expenses, rose to 89.5% from 87.4% a year earlier. A level below 100% indicates a profit. Low interest rates have also eroded gains on investments.

Gross written premiums rose to £15.5bn, up 7% from a year earlier, but investment returns more than halved to 0.6%. Return on capital dropped by a third to 10.7%.

Ninety-six syndicates underwrite insurance at Lloyd’s. Overseas insurers have been snapping up Lloyd’s companies as the easiest way to access this 300-year-old market. MS&AD said this week it had agreed to buy Lloyd’s insurer Amlin.

Meanwhile, Everest Re said late on Wednesday it had received approval for a new Lloyd’s syndicate.